Recently we have been getting a lot of questions asking if now is a good time to sell or buy a business and how would the business value be affected due to the coronavirus.
A lot of businesses are Thriving during the COVID-19. Buyers will take advantage of the incentives offered by the SBA in addition to the already low-interest rates. We are seeing growth in business in the following industries.
- Medial and Health care
- Grocery & Liquor Stores and other Essential Retailers
- Manufacturing, Packaging, and Processing Companies, especially in food industries
- Restaurants with delivery and pickup
There are still buyers out in the market that are contacting us for valuation and help. This is a temporary economic incident, plenty of liquidity exists in the finance and banking sectors. Small Main Street Companies will still have buyers as a lot of people recently lost their job and want to control their own destiny and have money to spend. The SBA is paying the first six months of debt payments.
How is my Business Value effected during COVID?
We’re continuing to complete valuations, as usual, using historical financial statements. We may start to see multiples shift downwards in the coming months. This will not be the same across every industry, so we are researching each client and industry thoroughly, monitoring their market outlook, and incorporating that into our work. In addition, we will review each company and their plan to recover cash flow and business. If you are not interested in selling use this time to add value to your business.
Now is the Right Time to Buy a Business
Several of our clients feel this is exactly the right time to buy a business. They feel good about the way the federal government, the SBA and banks have, overall, handled this unprecedented event. It may be just the right time to get the right price on a business as some owners may wish to sell while they think the lending environment is favorable to all parties.
With the slow down now would be a good time to get everything prepared for a potential seller and get a business estimate of value. As part of the $2.2 trillion CARES Act signed into law by President Trump on March 27th the SBA is paying six months of payments on existing SBA loans, including both principal and interest. This six months of payment under the 7a loan program applies for existing SBA loans and new SBA loans closed before September 27th, 2020.
If you would like to learn more about buying a business during the coronavirus read Scott Bushkie article on COVID-19 M&A: Buying a Business in Uncertain Times